Fiat Chrysler contract approved by local UAW leaders

The United Auto Workers union unveiled a richer proposed contract with Fiat Chrysler on Friday, a week after angry union members voted down a previous agreement.

The new agreement would gradually eliminate a much-maligned tiered pay system and bring all U.S. factory workers to the same wage over eight years. The previous agreement had only promised a top wage of $25.35 per hour for lower-tiered workers by 2019, which is less than the $29.76 per hour that longtime workers would make at that point.

The union agreed to lower wages for new hires in 2007, a few years before Chrysler fell into bankruptcy protection. But members have resented the varying pay, and the company's current CEO, Sergio Marchionne who took over when Chrysler merged with Italian automaker Fiat in 2009 has called the two-tier wages "unsustainable."

UAW President Dennis Williams said the union had always promised to bridge the gap in pay, but he understood that members wanted to see exactly how that would be accomplished. Under the new agreement, workers with four or more years of experience would make the $29 hourly wage within four years; workers with less experience would make between $22.50 and $28 in four years and top wages in eight years.

Union leaders recommending ratification

Union leadership voted Friday afternoon to recommend that members ratify the new agreement, which covers around 40,000 workers at 23 U.S. plants. Union members will likely start voting next week, but Williams said he hasn't set a deadline for voting to be completed.

About 45 per cent of FCA's U.S. hourly workers are lower-tiered workers who now make wages as low as $15.78 per hour. For a typical member with two years in, the UAW said the agreement is worth $44,000 over four years.

Harley Shaiken, a labour expert and professor at the University of California at Berkeley, said the proposed contract sends the message that companies in a highly competitive industry can still pay decent wages.

"If this is ratified, one can speak of auto workers once again earning middle class wages," he said. "That was the important model to come out of Detroit after World War II, and that may be the most important thing coming out of these negotiations."

Like the previous agreement, the new contract promises the first raises in nine years for the highest-paid workers, who now start at $28 per hour. Top-tier workers will get a $4,000 bonus if the agreement is ratified; lower-tier workers will get $3,000. The previous contract promised $3,000 bonuses for all workers.

Workers sought greater share of profits

Workers from both tiers banded together to defeat the previous contract, saying they deserved a bigger share of Fiat Chrysler's profits after giving up raises and bonuses when the company was struggling. After that defeat, the UAW and FCA resumed negotiations and hammered out the new agreement just before a strike deadline Wednesday night.

Williams said he set the deadline to put pressure on both sides to come to an agreement, not to settle any specific sticking point.

"Strikes are serious, and I've unfortunately lived through too many of them," he said. "It's not good for the company, and it's not good for our members."

The new agreement calls for a $5.3 billion investment in U.S. plants, as the previous agreement did, but this time the UAW spelled out which plants would get that investment and which would lose workers in a summary given to workers. A truck plant in the Detroit suburb of Warren, for example, will lose 2,406 jobs between 2017 and 2019, when a new product arrives.

The union also emphasized that members' health care benefits won't change under this agreement, something it failed to do in the previous summary. Williams removed language about a health care co-op he wants to form that could cut costs through education campaigns or by encouraging the use of particular providers or hospitals. He said the union will continue to research ways to cut costs and will try to explain the idea better to members.

"It's my fault, I should have educated people more on it," he said.